Canada’s hot housing market, high household debt are key economic risks: IMF
OTTAWA—The International Monetary Fund issued a warning Wednesday that a hot housing market and mounting household debt represent key domestic risks to Canada’s economic growth.
But in releasing its latest report card for Canada, the IMF predicted a soft landing for the housing market and described the economy’s performance as relatively stable in the global context, thanks to an improving export sector and stronger U.S. growth.
An IMF official said that Canada’s housing market is over-evaluated by roughly 10 per cent on a national scale, though in some regions those estimates could reach as high as 20 per cent.
“So, for us it remains a concern,” Hamid Faruqee told a news conference in Ottawa.
He cautioned Canada could be at risk of a sharp correction if interest rates rose too quickly and the labour market suffered a downturn.